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CanniMed to Acquire Up Cannabis Inc. (Newstrike Resources Ltd. - TSX-V HIP) to Create a Premier Global Cannabis Company

Nachrichtenquelle: Marketwired
18.11.2017, 01:12  |  1113   |   |   

SASKATOON, SASKATCHEWAN and OAKVILLE, ONTARIO--(Marketwired - Nov. 17, 2017) -

Editors Note: A photo for this release is available on the Canadian Press picture wire via Marketwired.

Transaction Highlights

  • Combining the leading medical brand and a high profile recreational brand to create a premier global cannabis company
  • Well positioned to offer innovative, high quality products with two top tier distinct brands uniquely positioned to address key product trends and emerging drivers of growth in both market segments
  • CanniMed and Up Cannabis will leverage infrastructure and expertise across both platforms to drive strong synergistic value while focusing on being leaders in their distinct markets, with best-in-class production and marketing practices
  • Expected to be accretive (before synergies) on key metrics by 2019
  • The Tragically Hip remain intimately involved as shareholders and active participants in the creation and support of the Up Cannabis brand
  • Significantly improves operational scale with a targeted 45,000 kg of capacity by 2019 and market breadth
  • Improved capital markets presence with a pro-forma capitalization exceeding $500mm
  • Newstrike shareholders to receive 33.0 CanniMed shares for each 1,000 shares of Newstrike

CanniMed Therapeutics Inc. (TSX:CMED) ("CanniMed") and Newstrike Resources Ltd. (TSX VENTURE:HIP) ("Newstrike") are pleased to announce that they have reached a definitive agreement (the "Arrangement Agreement") pursuant to which CanniMed will acquire all of the outstanding shares of Newstrike (the "Arrangement"), parent company of Up Cannabis Inc. ("Up Cannabis"), a licensed producer of cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR).

"This is a transformational strategic acquisition for our company, which will position CanniMed and Up Cannabis together as premium players in the emerging recreational cannabis marketplace, while equally staying true to our mandate to provide the best treatment and care to medical patients," said Brent Zettl, President and CEO, CanniMed. "Together, we recognize the importance of brand loyalty and will continue to build products, programs and resources to showcase our leadership in the cannabis arena."

Jay Wilgar, President and CEO of Up Cannabis, stated: "This is a watershed moment for Up Cannabis as we prepare for the opening of the recreational cannabis market opportunity in 2018. This business combination with CanniMed positions our collective team as a clear market leader, and we will work tirelessly to ensure that we keep building a brand and product offering that resonates unequivocally with the market."

The Arrangement will be by way of a plan of arrangement pursuant to which each Newstrike shareholder will receive 0.033 CanniMed shares in exchange for each Newstrike share held. Subsequent to closing of the Arrangement, the current CanniMed shareholders will own in aggregate approximately 65 per cent of the combined entity and the Newstrike shareholders will in aggregate own approximately 35 per cent of the combined entity.

Completion of the Arrangement is subject to the approval of shareholders of both companies at special meetings of the shareholders of each company. Newstrike will require the approval of 66 2/3 per cent of the shareholders that vote, by person or in proxy at the meeting, as well as a simple majority of the shareholders that vote, by person or in proxy, at the meeting, excluding certain insiders. CanniMed will require the approval of a simple majority of the shareholders that vote, by person or in proxy, at the meeting. Both companies will be communicating the timing and conduct of those meetings which are expected to be scheduled for early January 2018. Closing of the transaction is anticipated to occur in January 2018.

Arrangement Summary

The Arrangement Agreement provides that Newstrike shareholders will be entitled to receive 0.033 common shares of CanniMed for each Newstrike common share held, representing consideration of approximately C$0.505 per Newstrike common share based on the closing price of CanniMed common shares on November 14, 2017. Upon closing of the Arrangement, Newstrike will become a wholly‐owned subsidiary of CanniMed.

The Arrangement Agreement provides that both parties are subject to non‐solicitation provisions and provides that the board of both companies may, under certain circumstances, terminate the Arrangement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of C$5 million by Newstrike to CannMed or C$9.5 million by CanniMed to Newstrike, as the case may be. In addition, the Arrangement Agreement includes provisions providing for expense reimbursement of up to $600,000 from one party to the other in the event that the agreement is terminated under certain circumstances.

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